The Great Reset Didn’t Work: The Case of EVs

The Great Reset Didn’t Work: The Case of EVs
(boonchoke/Shutterstock)
Jeffrey A. Tucker
2/20/2024
Updated:
2/20/2024
0:00
Commentary

We are living through one of history’s longest and most excruciating versions of “We told you so.” When in March 2020, the world’s government decided to “shut down” the world’s economies, throttle any and all social activity, and deny kids schooling plus cancel worship services and holidays, there was no end to the warnings of the terrible collateral damage, even if most of them were censored.

Every bit of the warnings proved true. You see it in every story in the news. It’s behind every headline. It’s in countless family tragedies. It’s in the loss of trust. It’s in the upheaval in industry and demographics. The fingerprints of lockdowns are deeply embedded in every aspect of our lives, in ways obvious and not so much.

Actually, the results have been even worse than critics predicted, simply because the chaos lasted for such a long time. There are seemingly endless iterations of this theme. Learning losses, infrastructure breakages, rampant criminality, vast debt, inflation, lost work ethic, a growing commercial real estate bust, real income losses, political extremism, labor shortages, substance addiction, and more much besides, all trace to the fateful decision.

The headlines on seemingly unrelated matters go back to the same, in circuitous ways. A good example is the news of the electric vehicle bust. The confusion, disorientation, malinvestment, overproduction, and retrenchment—along with the crazed ambition to forcibly convert a country and world away from oil and gas toward wind and solar—all trace to those fateful days.

According to The Wall Street Journal: “As recently as a year ago, automakers were struggling to meet the hot demand for electric vehicles (EV). In a span of months, though, the dynamic flipped, leaving them hitting the brakes on what for many had been an all-out push toward an electric transformation.”

Reading the story, it’s clear that the reporter is downplaying the sheer scale of the boom-bust.

That’s not to say that Tesla itself is going bust, only that it has a defined market segment. The technology of EVs simply cannot and will not become the major way that Americans drive. It might have seemed otherwise for a moment in time, but that was because of factors that traced exactly to pent-up demand caused by lockdowns and huge errors in supply management because of bad signaling.

Looking back, the lockdowns hit in the spring of 2020, and supply chains were entirely frozen by force. This might have been a major problem for car manufacturers that had long relied on just-in-time inventory strategies. However, at that very time, the demand for travel collapsed. Commutes came to an end and vacations, too. At that same time, pre-arranged government subsidies and mandates for EVs flooded the industry, all of which were later ramped up by the Biden administration.

As demand picked up, retailers sold their old inventory of cars and looked to manufacturers for more, but the chips needed to complete the cars were not available. Many cars were put on hold and lots emptied out. This continued through the following year as used car prices soared and stock was otherwise depleted.

By the time that matters became desperate in the fall of 2021, manufacturers discerned a heightened demand for EVs and began to retool their factories for more. There was even a time when cars were being shipped without power steering, just to meet the demand.

It might have seemed for a time like the crazed period we just lived through was birthing a completely different way of life. A kind of irrationality, born of shock and awe, swept industry and culture. The EV was central to it.

This demand seemed to pan out in 2022 as Americans grabbed whatever cars were available, perhaps willing to give the new doohickies a shot. So on it went as more carmakers threw more resources at production, benefitting from massive subsidies and staying in compliance with new mandates for reducing their carbon footprint.

There was no particular reason to think anything would go wrong. But then the next year began to reveal uncomfortable truths. Cold weather dramatically cuts the range of the EVs. Charging stations are not as readily available on longer trips, charging takes longer than one expects, and having to plan such matters adds time. In addition, the repair bills can be extremely high if you can find someone to do it.

Tesla as a manufacturer had planned out all such contingencies but other carmakers less so. Very quickly, the EVs gained a bad reputation on a number of different fronts.

“Last summer, dealers began warning of unsold electric vehicles clogging their lots. Ford, General Motors, Volkswagen, and others shifted from frenetic spending on EVs to delaying or downsizing some projects,” the Journal wrote. “Dealers who had been begging automakers to ship more EVs faster are now turning them down.”

“[In short,] the massive miscalculation has left the industry in a bind, facing a potential glut of EVs and half-empty factories while still having to meet stricter environmental regulations globally.”

Today, lots are selling the cars at a loss just to avoid the costs of keeping them around.

Truly, this has been one spectacular boom-bust in a single industry. There seems to be no real end to the bust either. These days, it appears that everyone has given up on any chance of actually converting the mass of U.S. cars to become EVs. All recent trends are headed in the other direction.

Meanwhile, the EV is deeply loved by many as 1) a second car, 2) for well-to-do suburban commuters, 3) who own homes, 4) can charge overnight, and 5) have a gas car as a backup for cold weather and out-of-town trips. That is to say, the market is becoming exactly what it should be—a street-worthy golf cart with very fancy features—and not some paradigmatic case for the “great reset.” That’s simply not happening, despite all the subsidies and tax breaks.

“A confluence of factors had led many auto executives to see the potential for a dramatic societal shift to electric cars,” the Journal wrote, including “government regulations, corporate climate goals, the rise of Chinese EV makers, and Tesla’s stock valuation, which, at roughly $600 billion, still towers over the legacy car companies. But the push overlooked an important constituency: the consumer.”

Indeed, the U.S. economy, much to the chagrin of many, still primarily relies on consumers to make choices in their best interest. When that doesn’t happen, no amount of subsidies can make up the difference.

This story is impossible to understand without reference to the crazed illusions caused by lockdowns. Those are what provided the respite of time to allow automakers to retool. Then they boosted demand artificially for transportation after a long period in which inventory had been depleted.

Then the whole ridiculous ethos of the “great reset” convinced idiotic corporate executives that nothing would ever be the same. Maybe we would get 15-minute cities powered by sunbeams and breezes after all, along with a social credit system that would allow authorities to decommission our ability to drive in an instant.

It turns out that the entire bit, including the fake prosperity of the lockdown economy, made possible by money printing and grotesque levels of government spending, was unsustainable. Even sophisticated car companies bought into the nonsense. Now they are paying a very heavy price. The new market depended on a panic of buying that turned out to be temporary.

In short, the illusions of these horrible policies have come crashing down. It was born of liberty-wrecking policies under the cover of virus control. Every special interest, including a new generation of industrialists seeking to displace the old ones by force, seized the day.

More and more, it’s obvious what a disaster this was. And yet no one has apologized. Hardly anyone has admitted error. The big shots who wrecked the world are still in power.

The rest of us are left holding the bag and paying very high repair bills for cars that are nonoptimal for driving from one town to another and back again in the cold weather that was supposed to be gone by now had the “climate change” prophets been correct. They turned out to be as correct as those who promised us that we would no longer need “fossil fuels” and that the magic inoculation would protect everyone from a killer virus.

What astonishing illusions were born of this nutty and destructive period. At some point, not even corporate CEOs will be tricked by the experts.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Jeffrey A. Tucker is the founder and president of the Brownstone Institute, and the author of many thousands of articles in the scholarly and popular press, as well as 10 books in five languages, most recently “Liberty or Lockdown.” He is also the editor of The Best of Mises. He writes a daily column on economics for The Epoch Times and speaks widely on the topics of economics, technology, social philosophy, and culture.
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